As everyone in the financial industry will know and understand, things have been erratic and inflated for the last couple of years, with 2023 proving to be an especially turbulent time to be a mortgage adviser in this market. Many advisers may wonder what will come next with re-mortgage activity continuing to outstrip new purchase business.
Of course, we’ve seen patterns that suggest 2024 will continue along the same path, with re-mortgaging the primary source of income for many advisers around the country. Now seems the appropriate time to look at the industry’s current obstacles and the impending trajectory for the rest of the year.
Throughout this article, I’ll delve deeper into these factors, accompanied by what to expect over the next 18 months as an adviser.
The Current Climate of the Mortgage Market
Following the uncertainty of 2023, things are seemingly starting to shape into a better year; however, 2024 will be similar to the previous year in many ways. Rates could be unpredictable, but the next 12 months look to remain a predominantly re-mortgage-heavy market rather than seeing an influx of new purchase mortgages.
Inevitably, this has a knock-on effect on advisers’ earning ability. Consequently, it shines more of a light on the importance of general insurance and why they should focus more on it to improve and supplement their income into their business.
According to statistics supplied by UK Finance, house purchase lending fell by almost 25% to £130bn with 2024 is set to show a further decline, with an approximate 8% fall predicted before rising again in 2025 to around £123bn.
Challenges Currently Facing Insurers and Advisers
In this context, over the last 24 months, many will have seen home insurers consolidate, withdraw products, reduce footprints, and increase rates. This trend is set to continue in 2024, with RSA having already announced their imminent withdrawal from the market and those that remain continuing to raise rates to bring home insurance back to profitability.
The increasing frequency and the changing pattern of significant events, such as storms, floods, heavy rainfall, and other external factors, have played a considerable role in the shifting landscape of the insurance market, alongside overall inflationary implications to costs and availability of parts, services and tradespeople.
These considerable changes in the insurance market have inevitably caused advisers to adapt how they offer services to their customers.
Selling general insurance is inevitably more challenging due to all these factors. Ultimately, it’s out of the control of advisers and customers alike, with many already feeling the tight financial squeeze of the cost-of-living crisis.
Undoubtedly, things have become more challenging, with consumers finding it difficult to obtain reasonably priced insurance products and a real risk that customers leave themselves more exposed to under insurance or, worse, priced out of the market altogether.
What to Expect Over the Next 18 Months
Objectively, things are unlikely to improve drastically. There will be a further hardening of rate in 2024 as insurers continue to push themselves back towards profitability. Despite all this, there are tremendous opportunities here, and advisers are best placed to help customers navigate these challenges.
Almost 9 out of 10 of the mortgages completed by mortgage advisers still do not have home insurance sales connected to them. This means there are plenty of opportunities for advisers to promote their business, services and, importantly, their expertise in this problematic GI market.
We’re bound to see events coming thick and fast as we power through the rest of Q1, so be sure to contact us if you want to work with us. Our new systems can support you and your business, offering a range of versatility and customisation. You can call us on 029 20 265 265 or message us via the LiveChat feature on our website if you’d like to discuss this further.
Reference:
UK Finance Home, UK Finance. Available at: https://www.ukfinance.org.uk/ (Accessed: 23 January 2024).
